The AUD/USD turned bullish after the RBA announced that it would leave the lending rate unchanged at 3.50%. After a relatively low volume trading day due in part to the Labor Day holiday in North America, Asian markets turned bullish with Japan releasing poorer numbers than expected for both the Monetary Base and Average Cash Earnings. The AUD/USD dipped to a low of 1.02230, which happens to be the same level as the Weekly S1, before rebounding to the current price of 1.02747, kissing the 5 day EMA an hour before the London session begins. The zone between 1.0175 and 1.0225 has been acting as support as well as resistance for this pair for most of June & July and goes back to November 2010 as a key price level. Price closed below the 62 Day EMA last week for the first time in over 2 months which could signal a longer term bearish run is imminent, but remains above the 62 Week Moving Average at 1.02476. Combined with the strong support levels below, plus the fact that the 90 day 38.2% level sits even with the Weekly S1, this might be the start of a bullish reversal or continuation. If the bulls intend to charge, a close above 1.0350 would be instrumental of confirming that a bullish run is resuming. All fundamental factors aside, it is possible that bullish action will resume, but considering the overall slowing demand for Aussie Iron Ore and Chinese Steel, the dollar could be in a slump for some time.
Happy Trading!